Wednesday, 22 August 2012

Credit where it’s due, capitalism is ingenious. It owes its remarkable resiliency, says the American philosopher David Schweickart, to the fact that, while its basic institutions remain in place, it is in the rational self-interest of almost everybody to keep capitalists happy.

Under capitalism, you can have growth or you can have a recession. And nobody wants a recession.

“Economic growth is in the immediate interest of virtually every sector of society – growth in the straight-forwards sense as measured by GDP,” says Schweikart in his book, After Capitalism. “Whether or not such growth makes people happier or enhances the overall quality of life is quite beside the point.”

Here is Schweickart speaking:

Meaningless Democracy

Another American author, Gar Alperovitz, has noted the same mouse in the maze logic. Choices are so claustrophobically hemmed in by an overwhelming need to make business prosperous and create jobs that democracy is rendered meaningless.

In the absence of an alternative, he says in his book America Beyond Capitalism, the economy depends on the viability and success of its most important actor. So citizens and politicians have to give corporations what they want. Whether they want to or not.

He calls it “economic bondage”.

In the UK, economic bondage is proudly inscribed into every utterance of government. “We have listened to what business wants and we are delivering on it,” said David Cameron in July. “Business said, ‘We want competitive tax rates,’ and we are creating the most competitive tax regime in the G20 and the lowest rates of corporation tax in the G7”. QED.

Bankers’ Fatalism

It will be objected, naturally, that this bankers’ fatalism is self-defeating even on its own terms. Capitalism run in the interests of capitalists is a train crash waiting to happen. Again. Economic growth was consistently higher (actually it just existed), when tax rates for corporations and the wealthy were far in excess of what they are now. So cutting corporate income tax is just a self-serving manoeuvre.

Government economic policy in the US, UK and Europe is now predicated on using taxpayers’ money to buttress insolvent financial institutions and contrive corporate profits.The European Central Bank, which has absorbed banks' toxic debts while giving them cut-price finance, has seen its balance sheet grow from under 15% to over 30% of Eurozone GDP.

The wider impasse that capitalism faces is that its very success in holding down wages, just another cost to business after all, is choking the very consumer demand that it needs to prosper. Over the last two years, real wages in Britain have fallen by 7%.

“The roof might cave in,” he wrote in 2002. “A deep and enduring global depression is a real possibility.”

Welcome to the future, a near permanent economic slump.

System Failure

But, and it is a large and heavily ironic but, ubiquitous system failure doesn’t alter the compelling logic that while capitalism remains the dominant economic system (and there is no imminent sign of it disappearing in a puff of smoke), it is, as Schweickart says, in the rational self-interest of virtually everyone to make sure capitalists are in good spirits. Because virtually everyone is materially dependent on the system’s success.

Imagine you are 18 now (or don’t imagine if you are). “The truth is”, as Billy Bragg sang nearly thirty years go, “it’s a buyer’s market. They can afford to pick and choose.” It is in your rational self-interest to make yourself into the kind of person more likely to appeal to employers than rival potential employees. Whether you want to or not. It is just an appreciation of the situation you find yourself in. You can't go on strike.

The English psychologist Oliver James has written about the rise to prominence of Erich Fromm’s “marketing character”. Fromm was a psycho-analyst, a Marxist-Freudian and later Buddhist, German émigré who settled in the US. Way back in 1955 he observed a new psychological type, the “marketing character” - a person whose sense of value “depends on his success, depends on his saleability, depends on approval by others.”

“The identity crisis of modern society,” said Fromm, “is actually the crisis produced by the fact that its members have become selfless instruments, whose identity rests upon their participation in the corporations.”

James said in 2007 that Fromm’s insights seemed uncannily applicable to the contemporary English-speaking world. And with the labour market permanently tilted in the employer’s favour, the marketing character seems destined to become the overwhelmingly dominant psychological type of our age. The “marketing character” is the complete opposite of the “democratic character”. The marketing character depends on approval by others, experiences itself as a commodity and is defined by saleability. Democracy, to be meaningful, needs to be made up of people who are unintimidated, do not rely on the approval of others and are able, and free, to disagree.

Changing the Soul

In April, Chris Grayling, a Tory who really merits Aneurin Bevan’s description, attacked critics of the government’s work programme which compels the young unemployed to work for nothing for large companies in order to “gain experience”. “They just don’t understand that in today’s world, things don’t come on a plate,” he said. “That government can’t just create opportunity for all. That people have to go the extra mile if they want to succeed.”

Behind the lament for the hardness of “today’s world” there is relish about high unemployment. A tough labour market creates, against people’s will, the kind of character – malleable, dependent, grateful - that conservatives desire. “Economics is the method,” said Margaret Thatcher. “The object is to change the soul.”

Consider the effects of a further spike in youth unemployment. The need to go that “extra mile” will only become more urgent. Jobs will become more precious and the need to stand out to employers more necessary.

This “situational logic” leads to deformed choices. In the Italian town of Taranto, the Guardian newspaper reported in August, trade unions and local protesters are trying to stop the closure of the local steelworks which employs 12,000 people. A magistrate has ordered the furnaces to be shut down because the dioxins they belch out have been held responsible for killing local people. Cancer deaths are 15% higher than the national average. Yet, mass unemployment is considered by many to be a worse option. “Bizarrely, Italy’s health minister warned that losing your job was detrimental to your health,” the article says. But it is unquestionably true that losing your job is harmful to your health.

The Left points out how this system is entirely discredited. It pollutes, it mocks democracy, it leads to biocide, creates toil in the midst of technological abundance, and poverty in the midst of plenty. And the Right just says, ‘look at your immediate self-interest’.

Vindication not Victory

It is uncanny how practically all the events of the last decade have vindicated the (radical) Left. But being vindicated does not mean you win. There is a t-shirt marketed in Britain that pictures a contented looking Karl Marx below a speech bubble saying, “I warned you this would happen”. Congratulations, you were right all along. Now who are you again?

After the dust has settled on global financial collapse, the idiocy of credit default swaps, the money laundering by banks for criminal syndicates, the rigging of interest rates, the phone hacking, the marketing of anti-depressants to children, you wake up to the fact that the balance of power hasn’t altered. Those in power may be discredited but they still have power.

It is sobering and enlightening to return to David Schweickart’s definition of capitalism. One of its essential features, he says, is that it is based on wage labour. The vast majority of people in this society work for pay. They work for other people who own the “means of production”. The goods or services they produce do not belong to them, but to the small minority who own the means of production.

The Situational Logic

This feature, says Schweickart, gives capitalism its peculiar vulnerability to crisis, its booms and its busts. Purchasing power is based on what these wage labourers can negotiate from their contracts. If demand slumps, so does the system. But it also makes virtually everyone materially dependent on the health of the system. You have to keep the capitalists happy.

Recognition of our state of “economic bondage” is why thinkers like Alperovitz have come to the conclusion that future radical strategy has to lie in ending this dependency. He advocates the democratic control of wealth and ownership directly, through worker-controlled firms or indirectly, through municipally-owned enterprises. The problem goes well beyond who gets elected to government.

“The deepening social and economic pain is intensifying the situational logic that demands either that a new approach be undertaken,” he says, “or the social and economic pain must continue.”

Five years into the Great Recession we know things can only get worse before they get better.

About Me

Capitalism is not beautiful, said John Maynard Keynes. It is not intelligent, it is not virtuous and it not just. “But when we wonder what to put in its place, we are extremely perplexed.”
This blog is about the ideologies that mask the ugliness and injustice beneath the surface. And how our perplexity might be diminished.
You can contact me at idealogically@gmail.com